Saturday, October 6, 2012

The Next Gigantic Housing Bubble That Everyone Expects To Burst

Canada avoided many of the mistakes that the U.S. made in its housing market. Banking regulations and lending standards have been much tighter, and that has prevented prices from getting completely out of control.

However, top economists including Robert Shiller and David Rosenberg are increasingly sounding alarms that the Canadian housing market is the next bubble and it's about to burst.

 Canadian home prices are up nearly 100 percent since 2000, according to Euro Pacific Capital. And there are other characteristics that do bear some striking resemblance to America's housing boom-bust story. Moreover, this comes at a time when the nation's economic outlook has become uncertain.

 We put together a guide to Canada's housing debacle on a national scale, and focused on Vancouver and Toronto in particular where homes have become increasingly unaffordable. Canadian home prices have been rising for some time other than a brief blip during the the recession. Canadian home prices have been rising for some time other than a brief blip during the the recession. Read more

Seven Tips for Successful Offshore Investing / By Jeff Opdyke /
Over the last 16 years or so, I’ve opened brokerage and bank accounts all over the world, from Africa to Southeast Asia to Eastern Europe – all in an effort to gain access to a world of offshore investing opportunities that U.S. investors have typically been unable to reach.
I know from conversations with friends and people I’ve talked to through the years that the idea of trading globally scares some folks. I can promise you there’s nothing scary about it. I not only trade through brokerage firms in major markets like Sydney, Singapore and Hong Kong, I do so as well through firms in Zambia, Romania and Egypt – and I have never run into any significant problems. In fact, I routinely receive far more hands-on and attentive customer service than I ever have in my U.S. accounts.
So, today I share with you seven tips for trading overseas and offshore investing, built up through years of my personal trial and error.

Tip # 1: Open One Account to Trade Many Markets

Ever seen a Matryoshka doll – the Russian nesting-doll toys that hide dolls within other dolls? Well, what you want when you go overseas is what I call Matryoshka firms. They not only offer you access to trade in some major market you’re interested in, they also provide trading in multiple markets and multiple currencies, all from a single account.
That’s important because you don’t want to be in a position where you really want to trade a particular market, but first you have to go through the 10-day to two-week process of finding a firm in that country and opening the account. If you already have access to the market from another location, then you’re good to go the moment trading opportunities arise.
You’ll find Matryoshka firms in Asia, Europe and even Africa. The only dark spot is Latin America; finding any firms there that offer online access in English (more on that in a moment) is a challenge.

The original bottom fisher finds high risk and reward in Nevada

Forget about juggling a basket of country risk in places like South Africa and South America. For his money, newsletter writer John Kaiser would rather take a chance on explorers in his own backyard of the Western U.S. based on millions of years of geology and some exciting new discovery methods. In this exclusive interview with The Gold Report, Kaiser outlines the trends, and the juniors staking their claims, in Nevada.

The Gold Report: John, 2012 has been a volatile year for junior equities. What is your thesis for diversifying your portfolio to both protect and possibly grow wealth in this market?
John Kaiser: It's interesting that American households currently have bank deposits totaling $8.7 trillion, which is an all-time record, and yet these deposits are earning less than 1%. This illustrates the anxiety about where the general economy and equity markets are going. Given the risk that we could end up in a global recession next year that could possibly deteriorate into a depression down the road, it is understandable that the public wants to keep its capital secure.

This could have very negative implications for the general equity markets, which are vulnerable to all sorts of disruptions. That is why I am recommending that cautious investors leave 90–95% of their portfolio in low-yielding cash deposits and then shift the other 5–10% into a diversified portfolio of extremely high-risk securities that could yield some big winners. The area that I think is going to be very prospective in the next few years is discovery exploration in the resource sector, where stocks can go up 10, 20 or 30 times in response to a discovery.

TGR: A lot of the resource sector used to be focused on South Africa. That's becoming riskier due to worker unrest. South America has had violence and nationalization threats. Are there still opportunities in relatively safe domestic markets like the U.S.? (more)

Bill Moyers: ALEC, the Secretive Corporate-Legislative Body Writing US Laws

A Rare Occurrence In The Saudi Currency Market Tells You That Trouble Is Brewing In The Middle East

An important shift is developing in Saudi Arabian currency derivatives markets as Iran becomes engulfed in populist protests amid hyperinflationary pressures and armed conflict breaks out between Turkey and Syria, heightening concerns about tensions in the Middle East.
The 12-month forward rate on the Saudi Arabian riyal – or the difference between how many riyals traders think a dollar will be able to buy a year from now and how many riyals a dollar can buy today – has been hovering just above zero for the past two weeks.
In other words, as pointed out by BNP's Bartosz Pawlowski, traders are expecting the riyal to depreciate against the dollar. Or to think about it another way, people are betting that in a year, people expect that the dollar will be able to buy more riyals than that dollar is able to buy right now.
And that is something that almost never happens – unless markets are getting really worried about Saudi Arabia, one of the most stable countries in the region.
Here is a chart that shows the latest move above the zero level (that tiny blip at the far right) and also puts into perspective how rare of an occurrence it is for the rate to do so:

SAR 12m forward
Bloomberg, Business Insider
The reason the SAR 12m forward rate is usually way below zero, as most of the chart shows, is because Saudi Arabia runs a massive trade surplus due to its central role as oil exporter in the global economy. In other words, one would usually always expect the riyal to appreciate against the dollar.

Marc Faber & Jim Rogers On Our "Clueless, Ignorant, Dangerous" Leaders

While the discussions between these two legends varied from Phat Phong nightlife to Dow 30,000, and from China bullishness to AAPL bearishness, it was the conversation about the actions of Bernanke, and more importantly our political leaders that summed up perfectly the dreadful reality in which we find ourselves. The punchline: "It is very dangerous to have ignorant people believing that they know something."

Rogers is bullish China long-term but buying Chinese stocks only selectively...

Faber sees under-the-surface weakness in US equities and while central banks could print us to Dow 30,000; gold and other commodities will be astronomical by then...

Faber is bearish AAPL, believes its a bubble - but too dangerous to short...

Both are uber-bearish central-bankers and politicians...  (more)

2012 Dogs of the Dow Outperforming Slightly

by Bespoke Investment Group
The “Dogs of the Dow” is a popular passive investing strategy that says investors should simply buy the ten highest yielding stocks in the Dow at the start of each year.  So how have this year’s Dogs done so far?
As shown below, the average total return (dividends reinvested) of the ten highest yielding Dow stocks at the start of the year is +16.16%.  This is 136 basis points better than the average YTD total return of the 20 non Dogs, so the strategy is outperforming the index as a whole.  The two best Dogs so far this year have been General Electric (GE) and AT&T (T).  Both of these stocks have posted YTD gains of more than 30%.  Only one Dog is down so far this year — Intel (INTC).
While the ten highest yielding Dow stocks are doing better as a whole than the other twenty stocks in the index, it’s the stock with the lowest yield in the Dow that is up the most in 2012.  As shown below, Bank of America (BAC) — with a yield of 0.72% at the start of the year — is up 61.24% year to date.

The Only Way Out Is to Devalue / By Richard Russell
The following is an excerpt from Richard Russell’s Dow Theory Letters
“Political power grows out of the barrel of a gun.” Mao Tse-Tung
The US national debt is now over $16 trillion — and growing at the rate of more than $1.2 trillion a year. This is clearly unsustainable. But how to cut the debt? One way is to cut entitlements, which are growing exponentially. Will they cut Medicare? Cut food stamps? Cut any entitlements at all? No politician would dare make extensive cuts in entitlements.
OK, then raise taxes sky high for everyone, and I mean for everyone. Are you kidding? If we raised everyone’s taxes to the hilt, that still wouldn’t solve the US’s deficit problem. Furthermore, no politician would dare vote to raise taxes sky high!
Really, then how are we going to solve the debt and deficit problems?
It is not going to be solved. The temporary “solution” will be put off for as long as our pols can put it off. But how will they put it off? It will be put off in only one way — by devaluing the currency. And surprise, that’s what they’re doing now.

70 Second Market Outlook – Metals, Dollar, Bonds, Stocks, Energy

Over the past year we have had some really interesting things unfold in the market. Investing or even swing trading has been much more difficult because of all the wild economic data and daily headline news from all over the globe causing strong surges or sell offs almost every week.
For a while there you could not hold a position for more than a week without some type of news event moving the market enough to either push you deep in the money or get stopped out for a loss. This has unfortunately caused a lot of individuals to give up on trading which is not a good sign for the financial market as a whole.
The key to navigating stocks which everyone thinks are overbought is to trade small position sizes and focus on the shorter time frames like the 4 hour charts. This chart is my secret weapon and giving you both large price swings which daily chart traders focus on while also showing clear intraday patterns to spot reversals or continuation patterns with precise entry/exit points.
While I could ramble on about why the stock market is primed for major long term growth from this point forward I will keep things short and simple with some 4 hour and daily charts for you to see what I see and what I am thinking should unfold moving forward.
Keep in mind, the most accurate trading opportunities that happen week after week are the quick shifts in sentiment which only last 2-5 days at most which is what most of my charts below are focusing on…
Dollar Index – 4 Hour Chart
This chart shows a mini Head & Shoulders reversal pattern and likely target over the next five sessions. The dollar index has been driving the market for the past couple years so a lower dollar means higher stock and commodity prices.
Dollar Index Trading
Dollar Index Trading

Bond Futures – 4 Hour Chart
Money has been flowing into bonds for the past couple weeks with most traders and investors expecting a strong correction in stocks. As you can see the price of bonds hit resistance this week and as of Thursday has now started selling off. Money flowing out of this “Risk Off” asset means money will move to the “Risk On” investments like stocks and commodities. (more)